U.S. Securities & Exchange Commission
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U.S. Securities and Exchange Commission

Washington, D.C.

LITIGATION RELEASE NO. 17290 / December 21, 2001.

SECURITIES AND EXCHANGE COMMISSION v. ROBERT R. DILLIE and MID-AMERICA FOUNDATION, INC., Defendants, and MID-AMERICA FINANCIAL GROUP, INC., Relief Defendant (U.S.D.C., District of Arizona, Phoenix Division, Civil Action No. CV-01-2493-PHX-JAT)

On December 20, 2001, Judge James A. Teilborg of the United States District Court for the District of Arizona (Phoenix Division), issued a temporary restraining order halting a securities scam which sold purported Charitable Gift Annuities (CGAs) to elderly investors. The Commission sought the TRO and other relief in its civil action, also filed on December 20th. In its action, the Commission alleges that, among other things, an estimated $54 million was raised from the sale of these CGAs and that the monies were misappropriated by defendants to support a lavish lifestyle and pay gambling debts. The Court also issued orders freezing the assets of, and appointing a receiver for, named defendants and the one named relief defendant.

Named in the Commissions lawsuit are:

  • Defendant Robert Roy Dillie, a resident of Phoenix, Arizona currently living in Westport, South Dakota. Dillie was recently arrested on Nevada felony charges in connection with numerous bad checks given to Las Vegas casinos.

  • Defendant Mid-America Foundation, Inc. (Mid-America Foundation), a Delaware not-for-profit corporation with its principal place of business in Scottsdale, Arizona. The company issued the CGAs and most of the investor funds were deposited in bank and brokerage accounts in the name of Mid-America or its affiliates.

  • Relief Defendant Mid-America Financial Group, Inc. (Mid-America Financial), a Delaware corporation, formerly wholly owned by Dillie. In February 2001, Dillie supposedly sold the corporation to his niece, but retained control until at least October 2001. Mid-America Financial was the marketing arm for the sale of the Mid-America Foundation CGAs. It presently holds assets and property of Mid-America Foundation.

In its action, the Commission accuses Dillie and Mid-America Foundation of fleecing elderly investors of an estimated $54 million, since 1997, from the sale of CGAs. Dillie and Mid-America Foundation claimed, among other things: that the CGAs offered investors a safe, steady income, tax benefits, and a means to effect charitable donations; and that the CGAs were backed by funds invested in stocks, bonds, money market funds, and federal obligations. Rather than investing the funds as promised, defendants misappropriated and used the funds to pay personal, and often extravagant, expenses, including aircraft charters, gambling debts, personal residences, a ranch and child support.

The Commission's complaint charges Dillie and the Foundation with violating the antifraud provisions found in Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks a temporary restraining order, preliminary and permanent injunctions, an asset freeze, interim accounting, disgorgement with prejudgment interest and a civil money penalty against each defendant, as well as the appointment of a receiver over the assets of the defendants and relief defendant. In addition, the complaint also seeks disgorgement against the relief defendant. At the same time as it issued its TRO, asset freeze and appointment of receiver, the Court also ordered an interim accounting, expedited discovery and the preservation of all evidence.

The Commission would like to acknowledge the assistance of the Securities Division of the Arizona Corporation Commission with whom it has closely worked in bringing this action.


Modified: 01/10/2002